The US Has Low Taxes — So Why Do People Feel Ripped Off?

Today is the 100th anniversary of the federal income tax, which was signed into law by President Woodrow Wilson on October 3, 1913.

To mark the occasion, Moyers & Company caught up with David Cay Johnston, who has probably forgotten more about our tax code than most economic experts ever knew. Johnston won a Pulitzer Prize in 2001 for his comprehensive reporting on taxes and tax avoidance in The New York Times, and then authored a best-selling book on the subject, Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super-Rich – and Cheat Everybody Else.

Below is a lightly edited transcript of our discussion.

Joshua Holland: When we got into World War II, individuals and families paid 38 percent of federal income taxes and corporations picked up the other 62 percent. Last year, individuals and families paid 82 percent of federal income taxes and corporations paid just 18 percent. How did this happen?

David Cay Johnston: All modern societies require a large public sector to provide the goods and services on which the private sector depends. So you need commonwealth services – education, basic research, statistical gathering and civil law enforcement – a whole host of activity than can only be provided through the public sector.

Now, corporations have a concentrated interest in the taxes they pay and the capacity to lobby for changes and make campaign donations to rent, or in some cases buy politicians’ votes. Over a long period of time, they saw to it that we change these tax laws and shifted this burden.

We also dramatically increased the size of the federal government during the period from before World War II until now and some of the additional money you’re seeing is the result of increased Social Security taxes and Medicare taxes — some programs that benefit people generally, and that I think we should look at as efficient buying at the wholesale level, rather than retail.

Holland: Unpack that for me, David.

Johnston: Sure. Corporations in the days before World War II were essentially domestic operations, with a few exceptions. And we now have a global economy. And in the global economy, corporations all around the world are going to push to get the lowest tax — or no tax at all in some places — and then use that to pressure the US government to ease their tax burdens.

They’ve also, by the way, put in place innumerable little rules changes involving accounting and depreciation — that is writing down the value of equipment as it’s being used up — and other things, to reduce their bills.

Holland: And does this help explain why we have a very low tax burden overall, relative to other wealthy countries, but a lot of Americans feel that they’re being taxed to death?

Johnston: Well, one of the reasons some Americans feel they’re being taxed to death is that if you add up our taxes, which are low compared to other modern countries, and then you add in private expenditures for things the tax system pays for in other countries — a lot of our health care costs, higher education costs, admissions and fees and tickets and licenses for a lot of things — lo and behold, we end up being a relatively high-tax country. But it depends on how you analyze the data.

And let me give you one killer figure: We spend so much money on our health care in this country — or as I prefer to think of it, sick care in this country — that for every dollar that the other 33 modern economies spend for universal coverage, we spend $2.64. And this is done using something called “purchasing parity dollars,” so they’re truly comparable. So we spend $2.64 per person and still have almost 50 million people with no coverage and 30 million with limited coverage, and these other countries spend far less with universal coverage.

Here’s how much that costs: In the year 2010, if we had had the French health care system, which is one of the most expensive in the world, it would have provided universal coverage and it also would have saved us so much money that we could have eliminated the individual income tax that year and all else would have been equal. Our excess health care costs above those of the French were a little over 6 percent of the economy and the income tax in 2010 brought in about 6 percent of the economy.

Holland: And Dean Baker at the Center for Economic Policy and Research points out that if we paid the same for health care per person as all of the countries with longer life expectancies, we would be at a balanced budget today and looking at surpluses in the future.

Johnston: We can continue to have this enormous military operation — one that I have been very critical of — we can continue to have that if we just fix the health care problem. So imagine what happens if we get our health care costs in line by doing what every one of our economic competitors has figured out is the cheapest thing to do: universal health care with little or no out-of-pocket expense. And if we then cut back on this enormous military, where we spend 42 percent of all the military spending in the world, we would be able to lower taxes, run surpluses, fund higher education and research that will make us wealthier in the future. It’s just two things we need to address — just two.

Holland: Let’s go back to taxes. In your book, Perfectly Legal, which everybody should read, you showed that it’s not just the top one percent that are taking in so much more income than they did a generation ago, and paying less taxes on that income, but you really have to look at the top tenth of a percent or even the top one hundredth of one percent. Tell us about that.

Johnston: Well, the plutocrat class — that’s the top 16,000 households in this country — are where all the gains have been going since the end of the recession. Thirty-seven cents out of every dollar of increased income between 2009 and 2012 went to these 16,000 households — in a country of 314 million people.

So here’s what the newest data show based on tax returns: The average income of the bottom 90 percent of us has fallen 20 percent below where it was in the year 2000 — it fell from about $36,000 to $30,000. It has fallen back to the level of 1966, when Mustangs were new, Lyndon Johnson was president and we were prosecuting a war in Vietnam. 1966.

And what happened to the 1 percent of the 1 percent? Well, their income was about $5 million dollars a year back then on average and now it’s $23 million dollars a year on average.

Now it’s important to add a point: This is how it’s measured by the tax system. Very, very wealthy people — Warren Buffett, hedge fund managers, Mitt Romney when he ran a private equity fund — are not required to report most of their economic gains and legally they can literally live tax-free or nearly tax-free by borrowing against their assets. You can borrow these days, if you’re very wealthy, against your assets for less than 2 percent interest and the lowest tax rate you could pay is 15 percent. So no wealthy person with any sense of good economics will pay taxes if they can borrow against their assets. Now you and I can’t do that because our assets aren’t worth that much, but if you’re a billionaire and you borrow, let’s say, $10 million dollars a year to live on, you pay $200,000 interest, but your fortune through investing grows by $50 million. At the end of the year you pay no taxes, your wealth is up almost $40 million dollars and your cost was just the interest of $200,000.

Holland: Amazing. How much have changes to the tax code had to do with the sky-high level of inequality we see today?

Johnston: Oh, I believe that the Reagan-inspired changes in the tax code are absolutely fundamental to this enormous growth of inequality. When I went to The New York Times in 1995 and I started writing about inequality, there were a lot of people who thought I was some far-out radical. They got lots of calls and letters and complaints, and I just kept telling the editors, “Just watch the data — it’s going to show this will get worse.” And the reason is if you listened to what Reagan and his supporters said in the 1980 election, it was clear that it would lead to greater inequality. Here’s the way to think about it: The bottom 90 percent of us are actually paying slightly higher federal taxes than we did, as a share of our income, back in 1961. But the top 400 taxpayers in the country are paying 60 percent less and their incomes have grown so much that they’re making 35 times as much after-tax income because of higher incomes and lower taxes.

Now imagine you’re able to save money, and let’s say you make enough money to save $1,000 a year. If we cut your tax rate, which was $1,000 dollars, in half to $500, now you can save $1,500 dollars a year. Pretty soon, you’ve got a snowball that’s getting bigger and bigger.

Well, people at the very top have had their taxes cut 60 percent and they can’t spend all the money they’re making anyway. Nobody can consume a billion dollars a year unless they gamble it away. You can’t even consume that much in drugs — it will kill you for sure. You can’t consume that much entertaining mistresses — I don’t care if you’re a 21-year-old athlete in great shape — the body won’t allow it. The only way you can consume that much money is by gambling.

And so even — if you’re a billionaire — even with a jet and mansions and artwork, you can’t consume that kind of money. So what happens is this snowball grows at avalanche rates and that’s why we’re seeing this enormous build-up at the top.

And unfortunately, we’ve created a society now where we measure people not the way Martin Luther King said we should in his 1963 speech — “I have a dream that one day my four children will be judged not by the color of their skin, but the content of their character” — we judge people now by the presumed content of their wallets. We have replaced character with commas — it takes two to be a millionaire, three to be a billionaire, and that’s the measure we’re applying to people.

And people who have three commas, well, that’s not enough, there’s never enough. Money is like — as Richard Pryor once said about cocaine — too much is never enough. And so you have this sense of entitlement at the very top that you’re entitled to all of this money even though it’s not doing anything productive — it isn’t improving the quality of your life and it is actively damaging the lives of your fellow Americans.

Holland: My grandmother is obsessed with the question of why people who have billions want more. She can’t understand it.

Johnston: It’s very easy to understand — it’s a status thing. So you’re rich enough to own a one-eighth interest in a little Honda jet, but the guy down the road, he has his own Honda jet, and the guy down the road from him, he has a Gulfstream, and the guy down the road from him, he owns a jumbo jet, and the guy down the road from him, Sheldon Adelson, the guy who kept Newt Gingrich’s campaign alive, owns two personal 747s, one of which is equipped for skateboarding in the sky by his youngest heirs. Oh, I’m sorry, you think you’re well off because you own a jet? The guy down the street’s got two 747s, and by the way, I understand that there’s a private order in place for an Airbus 380. Gee, my yacht is only 350 feet, then you announce that you’re building the world’s biggest yacht and somebody then says, “No, I’m building a 410-foot yacht.” This is meaningless consumption in terms of making the world economy any better, but for egos, oh it’s, “Mine’s bigger than yours.”

Holland: Speaking of Mitt Romney, he famously said that there were 47 percent of American families that pay no income taxes, the federal income tax is fairly progressive, but it raises the same amount of revenues as the much more regressive payroll taxes, more or less, about 40 percent of the government’s income. Similarly, at the state and local level, the poor pay a much higher share of their income in taxes than the rich. The poorest 20 percent of the population pay over 11 percent of their incomes in state and local taxes, while the top 1 percent pays half that rate. Why do people focus on this one tax, the federal income tax, which generates about 40 percent of the federal government’s income?

Johnston: Well, because the anti-tax crowd for a hundred years has been trying to get rid of progressive income taxes and they have distorted and lied and we have what is politely called a low-information voter named Mitt Romney who made it demonstratively clear during the campaign that he had no idea what’s actually going on in the country.

By the way, do you know why 47 percent of Americans in one year — it’s no longer true, it’s going to drop back to the high 30s — but do you know why so many Americans do not pay federal income taxes?

Holland: Tell me.

Johnston: The lead reason for the increase is the Republican policy put in place in the ’90s of the child tax credit. So a married couple with two children does not pay any federal income taxes until they make at least $44,000 a year. And with a little bit of tax planning and a 401(k) plan and some other things, you could make $70,000 and pay no federal income tax. So the Republicans create this situation where middle-income families with children pay no income tax and then they complain about it. And nobody but me has called them on this.

Holland: I have!

Johnston: Okay, well, let me rephrase that. Only a handful of us have called them on this. You certainly are not hearing it on the network news and the front pages of the major newspapers.

Holland: No, you’re not.

David, final question. According to the Tax Justice Network, “$32 trillion has been hidden in small island banking hubs which host a bevy of trust funds, shell corporations and other tax havens.” That’s not just American dollars — it’s a global figure.

How much tax revenue are we losing here and what would our budget picture look like if this weren’t the case?

Johnston: The bottom line: we are not serious about high-end tax cheating in America. That’s one of the major problems. If you’re an ordinary worker, we take your taxes out of your paycheck before you get the money, which means that Congress doesn’t trust you. But if you’re a business owner, an investor, a landlord, then Congress trusts you to report your income, subject to audit, which is highly unlikely. And if you’re smart, your books are so complicated and the audit budgets are so small that unless you were blatant and stupid, you won’t get caught.

We had the case a few years ago of a fellow who public records at the Securities and Exchange Commission showed had made $2-plus billion and filed no income tax return, and the IRS was unaware of him.

We could solve our budget problems with the two things that I mentioned: getting a health care system that’s modern and efficient and reduces cost by about six percentage points of the economy while covering everybody; and two, just scaling back a little bit on the military that we operate as if we were going to go to war with Russia, the old Soviet Union, which we’re not.

And if we then made it a priority to make sure that the tax laws apply equally to everybody — we could probably cut everybody’s tax rates if we did that. But there’s no stomach on Capitol Hill for going after rich tax cheats who are sophisticated and smart, and so they get away with it.

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“In the year 2010, if we had had the French health care system, which is one of the most expensive in the world, it would have provided universal coverage and it also would have saved us so much money that we could have eliminated the individual income tax that year…”

Seriously, IF this is true, why would anyone be against it? Because “socialism”? What’s worse: being called a socialist country, or having universal health care for all Americans and having to pay no income tax?

WallStreetWindow

“…Joshua Holland: When we got into World War II, individuals and families paid 38 percent of federal income taxes and corporations picked up the other 62 percent. Last year, individuals and families paid 82 percent of federal income taxes and corporations paid just 18 percent. How did this happen?…”

It happens by hiring legions of talented high paid think tank “experts” in need of funding to write Op-Ed white papers labeled research. Then hiring armies of lobbyist to work full time promoting ideas that benefit Multi-National Corporations with multi-level pyramid Tax haven accounting schemes. Kill the labor unions and lower your responsibility to workers benefits, safety and the environment but getting America to give you access to cheap foreign communist labor in China and Vietnam (when Mexico workers ask for $2 an hour wages and benefits). Add Multi-Millionaire CEO’s and Multi-Billionaire hedge fund Capital Gains Tax Welfare. Pump-out Voodoo Job creation talk….Promise prosperity with Magic Beans Economics if they get Corporate, federal and capital gains tax cuts. Eventually the middle-class workers become just full-time consumers and low wage part-time labor to you. Bingo! Game Over. Wall Street Wins (again). Read: Hedrick Smith Who Stole the American Dream to learn how in August of 1971 a confidential memorandum from a man later appointed to the Supreme Court turned the tide….

IrishYank2

It’s because the vast majority of Americans have never even been to or had any real experience with a foreign country, particularly any with universal healthcare coverage. Therefore, such facts get twisted and contorted by the right into inaccurate information about universal healthcare and how it ruins economies, all the while ignoring the fact that our current system is hemorrhaging money. But THEY DON’T CARE. People will only believe what they want to believe. Thus the fact that even if Christ came back, he’d be assassinated by the religious right and branded a “socialist” for having Christian ways.

Anonymous

“Well, people at the very top have had their taxes cut 60 percent and they can’t spend all the money they’re making anyway. Nobody can consume a billion dollars a year unless they gamble it away. ”

Or they can give it to charity…which, fortunately, many of them do.

ljkmal

The people who are against it are the ones who are profiting from the status quo. And they can afford to keep things the way they are.

Sue Em

It is the media propaganda machine by outlets such as fox news. They make false statements by “experts” (who are nothing more than entertainers) and people believe it without ever researching it. Talk to them about climate change and they don’t believe it is happening. Talk to them about food stamps and they will tell you it is about a bunch of blacks that don’t want to work. Talk to them about health care they are upset because politicians are excluded from Obama care (which is not true by the way).

Anonymous

re: “talented high paid think tank ‘experts’ in need of funding”. Isn’t it sad when people use their super powers (aka ‘talents’) for evil rather than good? I miss Howard Zinn, MLK, Jr., RFK …

Obama needs to turn back into the person who first made that speech at DNC and we all voted for and expose the T.E.A. nuts for what they are: shills for the inequitable status quo which they don’t even realize hurts all themselves and all of us. Ironically…Reagan policies hurt even the billionaires who can’t take it w/ them and will leave behind a mess and worse-off world. If they think America is so full of “Exceptionalism” why are they destroying it w/ their selfish ideas? And begrudgng a basic human right like healthcare? .

Anonymous

Taxes are low? If Bill Moyers is drunk again, I hope he’s not driving this time. He should lose his license the other times. In any case, that would explain his bizarre notion that our taxes are low. I didn’t hear him saying that when George H. W. Bush raised taxes, or when Clinton and Obama ran on a middle class tax cut. What a dumb, pickled old man. Please take away his license before he kills someone.

Richard

Is your reading comprehension that poor? Please point me to where anyone said that the French don’t pay income tax. The statement is that in America in 2010, if we had the French system of health care instead of our own system, we could have covered everyone and saved enough so that the individual income tax could have been eliminated.

Stephen Coffey

Unfortunately, in one generation’s time the plutocrats will be those who were brought up to believe that giving to charity was wasteful, and they deserved the money.

Unless something is done to change course of course.

Richard Miller

Hong Kong has the most inequality in the developed world. Flat taxes are regressive. There’s no way around that.

Rich is your reading comprehension so shallow? I didn’t say the article said that, I just questioned If the US could have saved enough so individual income taxes could have been eliminated why couldn’t the French have saved enough? Couldn’t figure that one out, ‘eh. You have to start making some connections Richard. It is called critical thinking.

moderator

You have both made your points clearly. Please move on.

Thank You Sean @ Moyers

moderator

You have both made your points clearly. Please move on.

Thanks Sean @ Moyers

Chris Lamar

The math being used above doesn’t add up and leaves out a lot of data that totally destroys the argument

Chris Lamar

Hahahahahahahahaha You think they would eliminate a tax… Bwahahahahahahahaahahahahah

Anonymous

Care to expand on that?

Anonymous

The definition of charities has also changed in this time frame. Today, Karl Rove runs a 501c3 and a sister 501c4 organization which he’s described as “issues advocacy” groups. And by doing so, contributions to such groups become tax deductible…too many millionaires and billionaires define their contributions to groups like this (ALEC…anyone?) and call it charity.

Their charitable “donations”, all too often, are merely a shell game.

Anonymous

No, he can’t. Because…David Cay Johnston is probably the most knowledgeable person on the planet regarding the American tax system.

Anonymous

How much of the wealth at the far upper end is “real?”

In a sense, of course, it all is, in that I could sell you $10 million worth of derivatives and get $10 million to spend on yachts and mansions. But I couldn’t do that with $10 trillion. All I could do is trade one kind of paper for another. The amount of paper wealth is so absurdly huge it has limited fungibility. If we confiscated it all and spread it to everyone equally, well, there would be a lot of buying and stimulation of the economy, but there would be a lot of dollars chasing not a whole lot more goods.

“Everybody makes mistakes, the issue is how you deal with correcting them.”

Find the mistake in the column here and demand a retraction from David Cay Johnston then.

Anonymous

But we take income away that is earned…why not take a piece of”earned” interest/dividends when that is the easy money? The trouble is “innovative” financial instruments usually means legal tax evasion. (ENRON etc) benefiting the already rich…we do need to have better income or wealth distribution (whatever you call it) in a country as “wealthy” as ours. Teachers work just as hard as stock brokers.

Thank you. Yes, I made my point though I doubt it has been understood. Urkosh seems to think I did not read the article correctly but I have. If he can show me the single year then French paid no income tax, then this article and the authors claim may have credence. The author could have also said that If we, (the US) had done any number of things or not done any number of things, whether they were the way the French or any other nation did it, we could have eliminated any years income tax and still kept a balanced budget. There seems to be a disconnect between thinking and wishful thinking. I will leave it alone now.

Anonymous

Ah, yes, the mantra of our era. Entitlement has actually been disproportionately applied to the working poor who depend on food stamps etc. because they are so underpaid.

Far more entitlement has been self-righteously presumed by the wealthy, who refuse to see that they didn’t in fact “earn” all of their money. A substantial percentage of wealth is ‘earned’ by all the infinite services (roads, transporters, communications systems, the support systems of all the wealthy’s workforce — the education and health underpinnings, the suppliers of food and clothing, that allow their workers to show up for work — in short everything that makes a system run, that gives the wealthy the customers for their product or investors in their services). All of that is the foundation upon which a wealthy individual or company depends and exploits to make his or her own fortune. Yet they feel entitled to every penny, that they don’t owe a cent to the very foundation without which they’d be spitting in the wind – with no labor force, no customer base – no safety net even for the wealthy’s own “safety net” (as mentioned, Rand herself needing the benefits of research and provision of cancer treatment)…

To the contrary, the rich think they deserve the best ripoffs of government money (corporate welfare and otherwise) that tax lawyers and lobbyists can buy. And then, for one final slap in the face, their profits aren’t enough so they pull up stakes to offshore their businesses, stranding workers, because THEY feel no responsibility to the system that gave them their start in life. That is entitlement.

Compare the billions that the wealthy refuse to pay as a fair proportionate share of their taxes (a proportion far far less than they far more obligingly paid in the Eisenhower era when capitalism was rocketing forward) with the aggregate of so-called “entitlements” to the elderly and the poor, and ask who’s drawing down more in entitlements from the government — the routinely indicted and denigrated recipients of subsistence living and medical care? or the wealthiest who disdain and cheat the government out of billions in taxes rightfully due?

The self-righteously entitled ones in our current world? Start with the members of ALEC for Exhibit A, titans of the mega-CEO-lobbyist-financial complex (that has arguably surpassed even the military-industrial complex we already soft-pedaled to our peril), titans of shadowy unearned power mired in bitter self-grubbing subterfuges of well-founded laws and equitable stabilizing systems, seeking only to self-serve. That is entitlement.

The_Pilgrim

Hey, this makes a lot of sense! Well, it does, if you ignore the fact that the income tax is really just a very small portion of the tax burden on working Americans. Don’t leave out Social Security, Medicare, State and local income taxes, property taxes, excise taxes, fuel and gasoline taxes, cigarette and liquor taxes, State and local sales taxes…

Perhaps someone should write a book called Joshua Holland’s Biggest Lies About Everything…

The_Pilgrim

Isn’t it far more greedy to want to steal wealth you haven’t earned than wanting to keep wealth you did earn? Well, I suppose there’s a reason the greedy moochers (Ayn Rand’s term) can’t comprehend capitalism and think they’re entitled to other peoples’ money…

The person among my friends most against government healthcare has a four-generation family all covered by military healthcare or Medicare. Why is government healthcare “unsurpassed” when it’s her family, but absolutely unacceptable for the rest of us?

And, no, she never did get it that she’s been living off the taxpayer since she was 19 and joined the military.

William Carr

To be more accurate, the uber-rich feel “entitled” to not pay taxes.

Some of them seem to feel that they are above the Law.

It’s a philosophy based on the Supply Side Economics Lie, as promoted by Jude Wanniski.

You know, “Trickle-Down Economics” !

Don’t tax the Rich, and they’ll magically invest that money and hire more people.

But 32 years have proven, this NEVER works.

The Rich merely risk their extra income in the Stock Market and in Real Estate.

Hint: what do the Stock Market Crashes of 1929, 1987, and 2008 all have in common?

A Republican President had cut taxes on the Rich within the last eight years, followed by a Stock Market Crash and a Real Estate Crash.

Yup. EVERY time a Republican President cuts the taxes on the Rich, a Real Estate Bubble and a Stock Market Bubble forms, and they ALWAYS burst.

BTW, this has never happened under a Democratic President.

On the contrary, under Democratic Presidents we have more job growth, prosperity, and investment in our own country.

Anonymous

I believe the guy in Atlas was an architect. My argument is that he wouldn’t have earned anything if he hadn’t had workers to build his schemes. This of course applies across the broad. Forget the workers for a second–what about his mid-level employees? I’m sure they came up with a few original ideas along the way–even helped him out of some problems. I remember when the progressive income tax was accepted by most everyone, very little argument.

Anonymous

I’m afraid many of my students think the rich should be above it all. This I don’t get–public propaganda, probably.

Anonymous

After living in NYC for decades, I can testify that it beats out France by a mile for taxation–as for results? NY, like most American cities, is a garbage dump compared to French cities. Nassau County, a suburb of NYC, is just as taxed. Ditto on what you get for it.

Anonymous

Well, Richard, that’s the power of propaganda. I have poor students at my university in NYC who think Ayn Rand is the cat’s meow. Go figure. By the way, in France, the doctors make house calls–that’s right, HOUSE CALLS!!!

Anonymous

Did you read the article and the various comments here, franco? It’s one thing to be frank, franco, another to get what we’re talking about.

Anonymous

Sorry you had to explain the article again, Richard. You’re nicer than I am.

Anonymous

Come on, the French spend their saved money on other things–like good mass transit, infrastructure in general, clean places, investment in the arts. You know, things that enhance life for its citizens. How repeat after me, Americans, “Things that enhance life for its citizens.” Repeat that ten times. You see, this is what used to be done even in this country. We have forgotten about it. God bless the French. (Qualifier: I do have some French ancestry as an American.)

Anonymous

Clearly more needed to be said, moderator. See my comments above. (Although I do like the fact that you really do moderate, unlike, say the National Review site.)

Yes, Hazeleva, my brother and his family have lived in England for 40 years, so I know how popular national health is there. And few Americans know that they themselves are covered if they come to visit in the UK. What’s that called? A responsive government!!

Anonymous

True she was from the Soviet Union, but she lost relatives from the Nazis and form the war in general. Also, she would be aware of all this subsequently. Also, it’s must not have been much fun to pick up and leave. I’m not justifying her thinking in any way.

Anonymous

It is a battle of class, no question of that. Eisenhower would be a liberal now in relative terms. Who speaks against the oversized military (throw in spy) budgets today? Okay, Bernie Sanders, Dennis Kosinich, but Paul Wellfleet is dead now.

IrishYank2

You mean a government who serves the people, not just the corporations and their rich owners.

IrishYank2

In the Soviet Union, democracy won over communism. In the United States, capitalism won over democracy.

resonance

Low taxes? With federal, state, property, sales, FICA, and medicare, I am hovering around the 50% mark. That means that I work about half of the year to finance my government. 50% doesn’t seem low to me. It’s 6 months away from full blown slavery.

resonance

I think you should include both halves of FICA/Med as coming from the employee. Why? Because if they are self employed they pay both sides of it. Also, if an employer was willing to pay an employee top dollar from their budget, they would have to figure in the FICA/Med as part of the overhead for the employee. Therefore, it is actually pay cap on the employee, not the business. The business could have theoretically payed more if their budget did not have to cover the FICA/Med. The only reason those payments are divided is to give the worker the illusion that they are paying half the amount that they are actually contributing.